eBusiness Weekly
Tawanda Musarurwa
Seed-Co International (SCIL)’s revenues for FY2021 are likely to swell by 22.8 percent on the back of rising demand for seed in regional markets, according to market analysts at IH Securities.
And the market watchers think that there is significant scope for the company to boost returns to its shareholders in the long run.
“We forecast a 22.8 percent increase in Seed-Co International’s revenue to US$87.60 million in FY21, up from
US$71,35 million in FY20,” said IH Securities.
“We now estimate that the company trades on PER (+1) 8.24x, and EV/EBITDA (+1) 5.45x to 2021E compared to peers at PER (+) 14.79x and EV/EBITDA (+1) 9.10x for 2021E.”
The group is currently in the process of bringing together its operations. In a move that marks a complete turnaround from the group’s 2018 unbundling.
The Botswana Stock Exchange-listed Seed-Co International (which is secondarily listed on the United States dollar denominated Victoria Falls Stock Exchange – VFEX) will be merged with the Zimbabwean entity – Seed-Co Limited (SCL).
This will see all the group’s shareholders earning US dollar dividends.
But shareholders will also be pleased with performance prospects for the group for the new year, going forward.
Demand for SCIL’s products has largely remained unaffected by the Covid-19 pandemic and other macro-economic challenges. For the latest six months period, Seed-Co International’s maize seed sales volumes rose significantly by 56.6 percent while total revenue increased by 57.1 percent from US$17.75 million registered in H1 2020 to US$27.88 million recorded in H1 2021.
The company’s prospects look even brighter.
The group distributes various seed products across regional markets, and demand in these markets appears to be taking an upward trajectory.
“Despite Covid-19 resurgence, we expect the Company to register positive revenue growth benefiting from its essential business status.
“We anticipate food security to remain a priority on nations’ agendas and continue driving seed demand. The second half of fiscal year 2021 is expected to register better performance than the previous comparable period as normal to above normal rainfall forecasts will further enhance seed demand,” said IH Securities.
“The company continues to make inroads into new markets in Angola,
Mozambique, and Ethiopia as well as several countries in West and Central Africa.
“In South Africa, the company is targeting 10 percent share of the market, which will be achieved through its joint venture project with Limagrain and K2.
“Furthermore, the Company is diversifying its income streams by scaling up the vegetable seeds joint venture business with HM Clause while also exploring product out- licensing opportunities in North African and some Asian markets.”
